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Disney Signs Exclusive Distribution Deal with Netflix

Tricia Tongco |
December 4, 2012 | 3:00 p.m. PST

Executive Producer

Netflix has signed a multiyear agreement to carry Walt Disney's animated and live-action films, marking the first time a major studio has bypassed traditional premium cable-TV outlets for an online distributor.

The exclusive deal begins in 2016, after Disney's current deal with Liberty Media's pay-TV channel Starz expires.

Netflix has been granted streaming rights to movies from Disney's live action and animation studios, including those from Pixar, Marvel, and the recently acquired Lucasfilms. The terms, not covering DVD rentals, allow Netflix to stream Disney movies beginning seven to nine months after they appear in theaters, as Starz had done in Disney's prior agreement.

Neflix's stock surged after the deal was announced. On Tuesday, Netflix shares finished trading at $86.6491, up $10.6491, or  14 percent, the biggest daily gain in percentage terms since January.

"An exclusive deal with Disney differentiates the Netflix content from Hulu Plus and Amazon Instant Video," said Anthony DiClemente, an analyst with Barclays Capital.

The deal cost Netflix a "significant premium," which DiClemente estimates at a $250 million annual payment similar to the sum that Starz was paying.

"This deal brings to our subscribers some of the highest quality, most imaginative family films being made today," said Ted Sarandos, Netflix's chief content officer, in a statement. "It's a leap forward for Internet television."

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